CommerceHub Acquires ChannelAdvisor In Major Industry Shake-Up

SaaS

Sep 6

ChannelAdvisor Acquired

Well my friends, it went and happened. Two of the oldest and frankly more profitable eCommerce SaaS companies out are now one, as CommerceHub acquires ChannelAdvisor. Congrats to both sides!

First, I know so many of the players at both companies -- I spent 10 of the earliest years of my career at ChannelAdvisor and had CommerceHub as an RMW Commerce Consulting, LLC client a few years ago. I think this qualifies me as a ChannelAdvisor expert, right?

What is ChannelAdvisor?

ChannelAdvisor is a software service that allows online retailers and brands to sell into over 400 online marketplaces, including the most popular ones like Amazon, Walmart, and eBay. No other services has a broader network than Amazon. The resources of the combined company and combined customers will even make this stronger.

What does CommerceHub get and become with this acquisition?

- A huge stable of marketplace integrations and large brand customers integrated with marketplaces - much more modern than its own which was the result of a 2015 Mercent acquisition.

- A sizeable international presence, something that the Albany-based CommerceHub never seemed to master. (they don't call it "small-bany" for nothing)

- Significantly, they get to stop competing with each other. ChannelAdvisor had built a nascent 1P dropship offering, and CommerceHub continued to try and sell against ChannelAdvisor, with relatively limited success. That can all stop.

Why now?

Well, it seems to me there have been near constant rumors about ChannelAdvisor being up for sale in the past 5 years or so, looking for the right buyer and the right price. The 57% premium on the current share price for ChannelAdvisor by a strategic competitor was likely too high to pass up, especially in this market. Put another way, ChannelAdvisor was acquired for its peak pandemic price.

Also it’s clear for the last few years that ChannelAdvisor needed help. This could provide ChannelAdvisor the help it needs to get to the next level.

What's the market saying?

Well, first of all it’s possible that ChannelAdvisor competitors could be happy at this news. Not all acquisitions work out. ChannelAdvisor consultants could be happy because there could be more to do now if CommerceHub invests in the service.

I would say there have been no fewer than 5 acquisitions or investments in marketplace management-type companies in the Amazon/eBay/Walmart space. This is continuing that type of consolidation. The capability is important, but the margins are not high to run this kind of software company.

The reason is that you are the "glue". And there is ultimately not a lot of money in the glue. The money in this corner of the market is really in the ads business, something ChannelAdvisor participated in but was not the market leader.

If you are a brand that is a big ChannelAdvisor user, reach out it’s possible that I can help.

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Rick Watson

Rick Watson founded RMW Commerce Consulting after spending 20+ years as a technology entrepreneur and operator exclusively in the eCommerce industry with companies like ChannelAdvisor, BarnesandNoble.com, Merchantry, and Pitney Bowes.

Watson’s work today is centered on supporting investors and management teams incubating and growing direct-to-consumer businesses. Most recently, in partnership with WHP Global, Rick was a critical resource in architecting the WHP+ platform, a new turnkey direct to consumer digital e-commerce platform that powers AnneKlein.com and JosephAbboud.com.

Watson also hosts a weekly podcast, Watson Weekly, where he shares an unbiased, unfiltered expert take on the retail sector’s biggest players.

In the past year alone, Rick has spoken at many in-person and virtual events as well as podcasts on topics ranging from retail/ecom to supply chain/logistics and even digital grocery including CommerceNext IRL, ASCM Connect, and Retail Innovation Conference.

https://www.rmwcommerce.com/